Bulls & Bears: Time to Adapt Our Investment Strategies

Let’s face it: Humans are creatures of habit.

Knowing a bit about biology (my undergrad major), I realize there are evolutionary advantages to creating and executing habitual behaviors. This M.O. allows us to be more efficient with routine tasks, even paving the way for multi-tasking. Doing things we’ve done many times before helps us operate with confidence, which is a key to success.

But there’s also a detrimental side to habits. They prevent us from adapting to change.

For decades, it worked just fine to take a comfortable approach to investing. That involved buying a mix of stocks and bonds… and holding for the long haul.

And after years of success with this simple method, I fully understand that investors find most other strategies foreign and awkward…

But, if you find yourself holding tight to old habits… you’re not adapting.

Financial markets are truly global these days. So looking only to the U.S. stock market for wealth-building strategies makes little sense… especially if buying and holding is your bread and butter.

But even when I’m making market plays — like in Max Profit Alert — that means I have to consider other sectors as well. Currencies, commodities, bonds… each of these can affect the market prices of my chosen plays.

Yes, you have to look outside the stock market for true diversification. But you also have to take a nuanced or diversified look even inside the stock market.

Of course, since early 2009, U.S. stocks have been the best game in town — some would say the only game in town — against the backdrop of the Fed’s punch bowl of monetary stimulus. The S&P 500 has risen some 207% since its March 2009 low. And, to be frank, it’s been a fun ride!

But looking forward, we need to be strategizing not just how to make money in an ongoing bull market… we need to focus on bear markets, too.

Not all sectors fall at once or at the same speed. Finding the marginal plays — which sectors are moving in a positive direction relative to others — is one of the secrets behind the strategy I use in Max Profit Alert.

Adam O'Dell


Chief Investment Strategist, Dent Research